Apple To Make Billions On Google's Android

After the passing of Steve Jobs, investors face uncertainty in shares of Apple (AAPL). Will the stock next hit $100 or $1,000? This article is the third in a series, “The Future of Apple,” designed to give investors appropriate insights on the future of the iconic company.

Here we look into the Android mobile operating system developed by Google (GOOG) that directly competes with Apple. Google is supposed to make money from Android, not its competitor Apple, but Apple could be looking at a bonanza.

The reality is that Google may never make any money from Android. Google makes the software available free to phone manufacturers, but Apple is bound to make billions of dollars in royalties from Android.

I am an electrical engineer and a technology entrepreneur who has been involved in over 50 ventures. I have had my share of dealing with patents. Over years I have parlayed my knowledge of technology patents into tidy profits from investments designed to profit from patent disputes. Apple has built an enviable portfolio of smart phone patents. At present, Apple is pursuing patent litigation against Android phone vendors.

Let us start out by understanding one of the dozens of patents that Apple holds. The United States Patent and Trademark Office recently issued a patent to Apple for a ‘slide to unlock’ feature. All Android devices use this feature. This is the feature that a person uses to unlock a phone by sliding a thumb over an image to unlock the device. Slide-to-unlock has become so popular because it is the simplest and most elegant way to date to prevent inadvertent calls.

Slide to unlock patent issues have even reached the desk of Prime Minister Wu Den-yih of Taiwan. It is said that Wu expressed his concern to his entire cabinet. Wu has directed two of his ministries to help Taiwanese manufacturers deal with patent disputes with Apple.

Apple does not have just one patent; Apple has managed to build a moat of patents. An exhaustive treatment of all of Apple’s patents is beyond the scope of this article. However, to give the investors a glimpse of Apple’s fire power, listed below are the summaries of some of the important Apple patents related to the touch screen.

A computer-implemented method, for use in conjunction with a portable multifunction device with a touch screen display, comprises displaying a portion of page content, including a frame displaying a portion of frame content and also including other content of the page, on the touch screen display.

An N-finger translation gesture is detected on or near the touch screen display. In response, the page content, including the displayed portion of the frame content and the other content of the page, is translated to display a new portion of page content on the touch screen display. An M-finger translation gesture is detected on or near the touch screen display, where M is a different number than N. In response, the frame content is translated to display a new portion of frame content on the touch screen display, without translating the other content of the page.

US 7,663,607 1 Apple 2010 Multipoint Touchscreen

A touch panel having a transparent capacitive sensing medium configured to detect multiple touches or near touches that occur at the same time and at distinct locations in the plane of the touch panel and to produce distinct signals representative of the location of the touches on the plane of the touch panel for each of the multiple touches is disclosed.

Apparatus and methods are disclosed for simultaneously tracking multiple finger and palm contacts as hands approach, touch, and slide across a proximity-sensing, compliant, and flexible multi-touch surface. The surface consists of compressible cushion dielectric, electrode, and circuitry layers. A simple proximity transduction circuit is placed under each electrode to maximize signal-to-noise ratio and to reduce wiring complexity.

Such distributed transduction circuitry is economical for large surfaces when implemented with thin-film transistor techniques. Scanning and signal offset removal on an electrode array produces low-noise proximity images. Segmentation processing of each proximity image constructs a group of electrodes corresponding to each distinguishable contact and extracts shape, position and surface proximity features for each group. Groups in successive images which correspond to the same hand contact are linked by a persistent path tracker which also detects individual contact touchdown and liftoff.

Combinatorial optimization modules associate each contact’s path with a particular fingertip, thumb, or palm of either hand on the basis of biomechanical constraints and contact features. Classification of intuitive hand configurations and motions enables unprecedented integration of typing, resting, pointing, scrolling, 3D manipulation, and handwriting into a versatile, ergonomic computer input device.

Proximity based systems and methods that are implemented on an electronic device are disclosed. The method includes sensing an object spaced away and in close proximity to the electronic device. The method also includes performing an action in the electronic device when an object is sensed.

US 7,657, 849 Apple 2011 Unlocking a device by performing gestures on an unlock image

A device with a touch-sensitive display may be unlocked via gestures performed on the touch-sensitive display. The device is unlocked if contact with the display corresponds to a predefined gesture for unlocking the device. The device displays one or more unlock images with respect to which the predefined gesture is to be performed in order to unlock the device. The performance of the predefined gesture with respect to the unlock image may include moving the unlock image to a predefined location and/or moving the unlock image along a predefined path. The device may also display visual cues of the predefined gesture on the touch screen to remind a user of the gesture.

It is only a matter of time before billions of dollars in royalties start flowing from Google Android to Apple.

Next in “The Future Of Apple”: The next article in this series will focus on a small study done at The Arora Report on the impact of Apple Siri.

Full disclosure:I am long Apple from an average of $131. I took profits on 50% of the position at an average price of $360. Subscribers to ZYX Buy Change Alert may have a similar position and may have taken similar actions. Please feel free to write me at Nigam@TheAroraReport.com.

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Only AAPL innovates. A bunch of apple fan boys. I think it is petty and stupid all of the litigation taking place over stupid issues. Stop it and get back to work. AAPL did not invent the flip open laptop or even the laptop idea, they didn’t invent the trackpad, they didn’t event touch, yet, people only complain about other brands copying AAPL. Well, sorry to burst your bubble. AAPL has copied a lot of stuff too!

It’s clear that the USPTO is releasing tons of patents that don’t have anything to do with innovation and don’t contain any innovation. Even though the patenting process in the rest of the world in not doing well, in the US it is utterly broken. Such system is hitting the consumers all over the world because the patent holders ask royalties for every item sold worldwide. There is only one solution, leave the US market and refuse to pay US patents. Does it mean leaving a big chunk of the market ? Only for the moment, the share of the sales taken by US consumer is going down. Should it really happen I think the american consumers will start to purchase in the duty free shops while they travel. The starting price of a smarthpone without a contract attached is higher, but the freedom to choose the operator can help save money on the long term. Prices would be pushed down by the increased competition.

This article overlooks one key factor, Google does not stand by the OEMs when it comes to Android distribution. This is the reason why Microsoft is collecting money from more than half of the companies that produce Andriod handsets. Google can steal all the code they want, they aren’t selling it. The companies that are selling it are left to face the lawsuits alone since Google won’t step in to support them and because of that, they end up paying out money to other companies for each handset they move. Apple should do the same thing MS has done and go after the OEMs since Google isn’t interested in supporting them.

Could I write a post saying “Google to Make Billions Off Apple’s iPhone” based on the Motorola patents? Are you saying Google paid billions for Motorola and its wireless patent portfolio getting nothing “against” Apple in return?

They didn’t pay billions to get into the phone business. They paid billions to stack off Moto’s patent portfolio against Apple’s. Before Jobs died, we didn’t see Apple getting aggressive in US courts, did we? Instead, they went after Samsung. I am sure that Moto has plenty of hardware patents that Apple is in violation of, just the same. Apple will go away and can never enforce their patents. It would be mutually assured destruction.

There are exceptions to the rule on those patents though. They are so generalized that they can nearly cover any device made today.

They are not centric to the device, but merely describing touchscreen phones, which existed before the iPhone.

Courts, at least in the US, will not allow Apple to call every device on the market taking hints from their devices.

Take a look at the latest software update from Apple. iOS5 has blatant ripoffs of Android core OS functionality such as the notification center, but you don’t see Google chomping at the bit to sue left and right. This bogus patent law battle is getting ridiculous, and in the end it will only end up harming consumers with higher price tags, delays in software updates and new hardware release dates.

It is articles like this make me lose more respect for Apple by the day. They are putting patents on some of the most ridiculous things so they can literally try their best to run a monopoly in the mobile device market. For one, Google bought Android in 2005, therefore that OS technically emerged first. Secondly, Samsung built one of the first smartphones in 2007 running an OS different than Windows Mobile or Web OS. Apple copied the layout of the interface (horizontal scrolling Apps) and then turned around and patented that and the iPhone came about. Apple is so very lucky that Samsung did not end up buying Web OS because the original Palm phones had an abundance of patents that Samsung could have thrown into Apple’s face. Plus Apple is sticking it to people, Samsung has now surpassed Apple in the sales of smartphones but yet Apple is claiming up to 3 times the profits.

Apple reminds me of that kid in school that you disliked who would always steal other people’s ideas, quickly finish the project and claim all the credit..